VentureBeat

Widget distribution network Gigya raked in $11 million in third round funding to continue building out two existing products of its own called Wildfire and Socialize.

They serve different but related purposes: Wildfire provides a platform for other widget developers to post and share their creations with a broader audience, while Socialize provides any website with the tools it needs to incorporate social networking features (things like a newsfeed that tracks friend activity, and a panel for sharing interesting content).

Even though Wildfire already serves 1,000 widget makers and is bringing in some revenue by circulating branded widgets from big names like Disney and Kimberly-Clark, Gigya predicts that Socialize will soon surpass it in value as more sites join the social-networking fray. Already, the app is able to aggregate friend data from sites like Facebook and MySpace, giving it an edge over competitor Google Friend Connect, which has not yet landed the support of the two networking giants. Socialize is also unique in that its open API allows sites to engineer their own social networking features to meet their specific needs, whereas Google’s service offers only pre-made plug and play features.

Notably, Gigya’s chief rival, San Francisco-based Widgetbox Inc., has been ahead in the valuation game — it’s unclear whether Gigya has caught up in this round. After Widgetbox’s second round of financing in January, it had an estimated $61.9 million value. Gigya was valued at $26 million after its last round in March, according to VCExperts.com. Interestingly, Gigya receives more “company friendly” money (as opposed to “investor friendly” money) than Widgetbox. In other words, its funding comes with more flexible terms, and will be less expensive for the company in the long run, which could give it a significant leg up in the faltering economy.

DAG Ventures led the round, followed by previous investors Benchmark Capital, First Round Capital and the Mayfield Fund. The Palo Alto, Calif.-based company has raised $23.5M since its inception in 2006.

Big media is getting into widget advertising, in order to reach people on sites across the web. One example: Media conglomerate CBS is launching a local widget ad network today, with the goal of drawing more traffic to its own web sites — and making money from partner sites in the process. Another example: DoubleClick, the advertising giant (that Google has just gotten final approval to purchase), has announced its own widget ad network today.

Widgets are small snippets of code that web publishers can embed on their sites, that feature live, interactive information from other sites. But many have wondered how widgets — and more complex versions, such as Facebook applications — can make money. The answer is emerging now, as companies like CBS and DoubleClick start running more ads within widgets — and make money for themselves, for their widget-technology startup partners, and for publishers.

CBS is offering a local widget ad network where a third-party site located in the same geographic area as a CBS television station can run a widget that features news clips from the station as well as CBS’s own ads. Local blogs and other social media sites are new competitors to local television. This is a way for CBS to make money and gain traffic through these sites at the same time, turning them into partners, not just competitors, with CBS at the center. CBS has been one of the big media companies to aggressively experiment with widgets and social media, such as its widget that shows sports scores, here.

Sites that run the ad widgets will get a share of the revenue from CBS — and must be approved first. CBS, in turn, will make money from the ads on its partner sites. Since the widgets are designed to drive local users back to CBS, its local station web sites themselves will also presumably see an uptick in online traffic and online advertising.

CBS itself isn’t creating the widgets — it has partnered with a company called Syndigo Networks to administer the technology (more information here).

San Francisco-based SFBayStyle is one local site running the widget already (see screenshot, above). Other cities with CBS local stations offering the ad network include: Boston, Dallas-Fort Worth, Denver, and Chicago. Other stations that will soon offer the ad network include New York, Los Angeles, Philadelphia, Minneapolis-St. Paul, Miami, Sacramento, Pittsburgh, and Baltimore.

Meanwhile, Doubleclick will offer a more general form of widget advertising. It has partnered with widget distribution technology company Gigya (our coverage), with DoubleClick offering widget creation services within its existing interface for ad creation and management. Gigya already offers an ad-widget service to site publishers (more here), where you can grab a widget featuring an ad and put it on your site. The DoubleClick deal makes it easier for DoubleClick’s large base of advertisers to try their hand at widget ads and increases the inventory of ads that Gigya users can run on their sites.

Numerous startups have already been experimenting with running ads within widgets on web sites, including Clearspring (our coverage) and Widgetbox (our coverage), and so have numerous Facebook application ad networks such as RockYou, Slide, Social Media, Lookery and others. But it hasn’t been clear how these companies could find large amounts of advertising revenue — the answer may be brand advertising, because the large advertisers that companies like CBS and DoubleClick serve are hungry for better ways to reach users. John Battelle of Federated Media (which VentureBeat uses for some of its advertising) has more thoughts on the evolution of brand advertising here.

Note: Applications on Facebook and other social networks are essentially more complex versions of widgets, because they’re able to incorporate data and features of social networks using the social networks’ developer platforms. Google and other large advertisers have also been experimenting with ads that run within Facebook applications (our coverage), but neither CBS nor DoubleClick are getting into that game — at least they haven’t yet.

Gigya, the Silicon Valley company that lets companies including RockYou track how advertising performs on their widgets across the Web, has raised $9.5 million in a second round of funding from Mayfield Fund and existing investors Benchmark Capital and First Round Capital.

Gigya, based in Palo Alto, Calif., offers ad-monitoring technology among a number of other tools it supplies to widget-makers like RockYou. Gigya helps companies make widgets, but its real focus is on helping those companies — clients include Toyota, Sprint and MTV — spread the widgets across the web and track their performance.

Among other things, it provides drop-down menus that lets users select which social networks they want the widget on (see image at the bottom of the page). This lets widget owners make, say, Orkut the first choice, if the owner wants to market the widget among Brazilian users, or Facebook the first choice if the owner want to market to Canada 20-somethings.

Gigya’s technology is used to install hundreds of thousands of widgets per day, the company says. It tracks more than three billion widget impressions per month. It says it is the largest widget distribution network (for proof, check out the logo-cloud above, which shows the companies it serves).

However, large widget companies like Slide use their own internal technology for distribution and tracking advertising impressions. Clearspring is another competing company, but Clearspring hosts widgets on its own servers, and so maintains more control over the widget making and distribution process. Gigya, by contrast, simply provides a code that is inserted into widgets, and customers like Toyota can choose to run the widgets from their own servers.

Gigya hasn’t focused too much on making money too date, instead it seeking to become the distribution standard on the Web. But it does plan to make money from revenue shares, for example from a company like Toyota, which might pay Gigya a fee for help in distributing its widget to third-party sites.

Co-founder Rooly Eliezerov told me he hopes the company will reach break-even within the next year and a half.

Mayfield’s Navin Chaddha joins Benchmark’s Michael Eisenberg on Gigya’s board.

Plug and Play Tech Center, a startup incubator based in Sunnyvale, will be hosting an exposition tomorrow afternoon.

Forty companies will be presenting, most with no significant venture backing. Below is a summary.

The Center itself offers a range of services to companies, from office space and other facilities to web hosting. It is the incubator arm of the Amidi family, a successful Iranian immigrant family that has gone from selling fine rugs in the area (our coverage), to real estate (it owned the early offices of Paypal and Google) and investing, among a range of other business ventures.

A number of notable startups have come out of the PlugandPlay since it launched a little more than a year ago. One of them, the mobile video site Mywaves, announced today it had 1.25 million unique users — a 400 percent increase over the last three months, with average visits of 20 minutes, the company claims.

Some of the well-known companies presenting tomorrow will include Lending Club (coverage), TechDirt (coverage), Vator.tv (coverage) and Twiki.

But be warned: Some of these startups illustrate the just how few good company names are left on the web, a problem most recently pointed out earlier this week.

Highlighted presenting companies:

BlueGem Security: Security encryption software to keep data thieves from hacking into your computer and figuring out what you’re typing — bank account passwords, for example. It provides a locally based secure socket layer, or SSL, software that operates between computer hardware and your operating system. The company says its software has been downloaded over 70 million times. Besides the software industry at large, and financial services, the company’s software is used in health care to secure patient records and drug research. Competitors include RSA Security, PassMark Security, TriCipher and StrikeForce.

FuGen Solutions: Identity management that works across web services within a business so that users — employees and customers — can use different software systems that are part of a company’s services. Potentially useful for large companies with many poorly integrated web services.

Gigya: A way for developers to let users post widgets to their social network pages on Myspace and other social networks, blogs, and other web sites with a single click. It also provides distribution and usage analytics. Impressively, the company’s partners include many top widget providers, including RockYou, Metacafe, Webshots, Gaiaonline, and many others. Techcrunch has more, and separately notes the company has raised $2.4 million from Benchmark and First Round Capital in June.

Zephyr: A closed-beta startup trying to solve organizational problems in “quality assurance” software testing departments of software companies. It uses Adobe’s software developer tool Flex to let you run the software on either your own computer or over the web. This allows for a snappier interface than is often seen on web applications, specifically drag-and-drop windows that show assignments for team members, lists of software bugs, charts on how fast people are working, and other tools for measuring progress on a software testing project. Boring software to many, but the company tells us they’re getting interest from some large tech companies that are stuck with hard to use testing software.

Other presenting companies:

Apsoftek: Identity management software.

Bizyweb: Software to help you add widgets and other features to a web site without having to redesign it.

Broker Storage: Online backup of real estate data, which analyzes past sales then notifies real estate brokers and agents using the system of potential leads to future clients.

Ccube: A voice over internet protocal, or VOIP, calling service that doesn’t reveal your personal phone number.

Ceino: Software for use in computer kiosks in malls, to help shoppers find what they’re looking for.

College Wikis: Wikis for people on college campuses. The concept is somewhere between a college newspaper and Facebook’s “network” pages.

CopaCast: Online advertising measurement.

DataMash: Instantly sends updates between shared documents and applications.

Geejo: [No information available. Apparently, the name is derived from "hobo."]

GetQuick: [No information available]

MyMagMedia: An online publishing platform.

Moowee: Uses web connections in devices such as the Wii to allow TV’s to play online video.

Paybl: Building a new kind of payment system, but unlaunched.

PhotoCrank: personalize photos on your mobile phone with captions and graphics.

Pixsy: white-label image and video search.

Planaroo: An event-planning site.

Pollection: A polling service; includes a Facebook application.

QbizTech: Customized business software.

QlipMedia: A handy tool for blending voice and video mail (see VB coverage)

ScreenerKey: [no information available]

Souki.com: Restaurant reviews with an “AJAXian” interface.

Spigit: Social networking features built around a system of measuring each users reputation and ideas.

Spokeo: A unified platform for tracking your friends across online community sites (!).

StrayForm: A DRM-free online community for artists and fans, where fans can fund artists’ projects.

SueEasy: [Intriguing name, but sadly, no information available]

Xpree: Expert predictions for businesses (unlaunched).

UrNetlife: View summaries of your accounts on other web sites that you’d otherwise have to log in to access, from a central location.

UserZoom: Remote testing for the usability of web interfaces (demo only at the expo).

Zipidee: A marketplace for selling digital goods, launching at the expo.